What are some common M&A “deal killers”?
Some common deal killers include:
Valuation disagreements
Due diligence issues: things like financial discrepancies, legal problems, operational challenges, or undisclosed liabilities. Significant concerns can cause a buyer to renegotiate the deal terms or walk away altogether.
Financing problems: Buyers may face challenges in securing financing for the transaction
Earn-out disagreements: Earn-outs are contingent payments based on the target company's future performance. Disagreements over the structure, terms, or performance metrics of an earn-out can be deal breakers.
Key employee retention
Indemnification and representations/warranties disputes: Disagreements over the scope and extent of indemnification provisions and presentations/warranties can create friction between the buyer and seller.
Cold feet or loss of interest: Either the buyer or seller may experience a change of heart or loss of interest in the transaction for various reasons, including changes in market conditions or strategic priorities.